2 20 points eBook On December 28, 20x3, Stern Corporation and Ram Company established S&R Partnership, with cash contributions of $15,000 and $45,000, respectively. The partnership's purpose is to purchase from Stern accounts receivable that have an average collection period of 80 days and hold them to collection. The partnership borrows cash from Midtown Bank and purchases the receivables without recourse but at an amount equal to the expected percent to be collected, less a financing fee of 4 percent of the gross receivables. Stern and Ram hold 25 percent and 75 percent of the ownership of the partnership, respectively, and Stern guarantees both the bank loan made to the partnership and a 20 percent annual return on the investment made by Ram. Stern receives any income in excess of the 20 percent return guaranteed to Ram. The partnership agreement provides Stern total control over the partnership's activities. On December 31, 20x3, Stern sold $8,030,000 of accounts receivable to the partnership. The partnership immediately borrowed $7,530,000 from the bank and paid Stern $7,390,000. Prior to the sale, Stern had established a $413,000 allowance for uncollectibles on the receivables sold to the partnership. The balance sheets of Stern and S&R immediately after the sale of receivables to the partnership contained the following: Print References Cash Accounts Receivable Allowance for Uncollectible Accounts Other Assets Prepaid Finance Charges Investment in S&R Partnership Accounts Payable Deferred Revenue Bank Notes Payable Bonds Payable Common Stock Retained Earnings Capital, Stern Corporation Capital, Ram Company Required: Stern Corporation S&R Partnership $ 7,985,000 4,230,000 (211,000) 5,540,000 321,200 15,000 950,000 9,760,000 $ 294,200 8,830,000 (413,000) 321,200 7,530,000 694,000 6,476,200 15,000 45,000 Assuming that Stern is S&R's primary beneficiary, prepare a consolidated balance sheet for Stern at January 1, 20X4. Note: Amounts to be deducted should be Indicated by a minus sign. Assets Total Assets Liabilities Stockholders' Equity: Controlling Interest: STERN CORPORATION Consolidated Balance Sheet January 1, 20X4 Total Controlling Interest Total Stockholders' Equity Total Liabilities and Stockholders' Equity